The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options. How to set a budget and stick to it A budget is the tool you need to help you stretch your paycheck as far as it'll go. And all it takes is just a little bit of discipline, planning, and most importantly, prioritization. While creating a budget may seem overwhelming at first - the time you spend putting it together, will certainly be worth it when the process of paying your monthly bills becomes a little less stressful. So, where do you start? Well, setting a goal is always a good place to begin. It gives you something to shoot for. And then, of course, making a plan that's going to set you in motion. So here's how to do that in six easy steps. Step one: know your income. Seems simple enough, right? But knowing how much you can spend each month starts with knowing how much you take home. That means you can't build your budget based on your salary. It should be based on your net income. So, get out some pay stubs and see what you're clearing after taxes, insurance, 401K contributions, and, other stuff like that. Step two: determine your basic expenses. Figure out what your fixed expenses are every month. These are the things that don't fluctuate or change dramatically throughout the year, like, rent or mortgage payments, good old car payments, insurance, and student loans. This is also a good time to make sure you have some kind of safety net to help pay for these expenses in case of an emergency, like, if you need a new water heater or your car needs a new transmission. Step three: determine expenses that vary each month. These are the things that change, based on usage, like your phone and other utilities, as well as your grocery bill– that could change. You could also add up all those flexible expenses, like clothes, restaurant meals, and entertainment costs. These are the costs that you have control over. Step four: determine what's really important. When it comes to creating a budget that works, you have to take a really hard look at what you feel is truly necessary. As much as you like to think you can't live without the latest gadget, this type of expense should go into the 'like-to-have' category. So, if you want to find the fluff in your budget, start digging into your variable expenses and rank what's most important to you. Do you really need unlimited texting on your cell phone? If not, get rid of it. Are you watching all the 437 channels of cable? Downgrade to basic. Step five: follow your spending and review monthly. You want to give your budget a fighting chance, right? So just keep an eye on your wallet, and especially those credit cards, to make sure you're spending within limits throughout the month. It's easy to forget - right? - and even easier for the small things to start adding up, so keep on it. Step six: keep track. Find a way that works for you to keep track of your expenses. That can mean the old pen and paper, a spreadsheet, or one of those new fancy, fun budgeting apps. A lot of banks have these as part of their online banking. They are easy to find and use, so be sure to look for them. Then, you just balance your budget. Keep your income information current and track your actual expenses monthly. After a few months, you're going to start to see patterns and figure out where you can streamline and make adjustments. Now, if you don’t want to go it alone, there are some sites all over the Internet to help you analyze what have you coming in and what you're spending. All in all, making a budget is a process that will take some time and effort, but put these steps into place and what you'll get in return is well worth it. Before long, you can have more money for the things you want, in addition to the things you need. How to set a budget and stick to it A budget is the tool you need to help you stretch your paycheck as far as it'll go. And all it takes is just a little bit of discipline, planning, and most importantly, prioritization. While creating a budget may seem overwhelming at first - the time you spend putting it together, will certainly be worth it when the process of paying your monthly bills becomes a little less stressful. So, where do you start? Well, setting a goal is always a good place to begin. It gives you something to shoot for. And then, of course, making a plan that's going to set you in motion. So here's how to do that in six easy steps. Setting up a budget can be a daunting task. There is no reason to be intimidated by this process. Once you have set up your budget you can easily see where your money is going and how much you have left to save and spend. Just follow these seven easy steps. Your budget is a tool to help you, not a straitjacket to keep you from enjoying life, ever. If there’s no money for fun, you’ll be less likely to stick with your budget — and a good budget is one you’ll stick with. Step one: know your income. Seems simple enough, right? But knowing how much you can spend each month starts with knowing how much you take home. That means you can't build your budget based on your salary. It should be based on your net income. So, get out some pay stubs and see what you're clearing after taxes, insurance, 401K contributions, and, other stuff like that. Step two: determine your basic expenses. Figure out what your fixed expenses are every month. These are the things that don't fluctuate or change dramatically throughout the year, like, rent or mortgage payments, good old car payments, insurance, and student loans. This is also a good time to make sure you have some kind of safety net to help pay for these expenses in case of an emergency, like, if you need a new water heater or your car needs a new transmission. Step three: determine expenses that vary each month. These are the things that change, based on usage, like your phone and other utilities, as well as your grocery bill– that could change. You could also add up all those flexible expenses, like clothes, restaurant meals, and entertainment costs. These are the costs that you have control over. Step four: determine what's really important. When it comes to creating a budget that works, you have to take a really hard look at what you feel is truly necessary. As much as you like to think you can't live without the latest gadget, this type of expense should go into the 'like-to-have' category. So, if you want to find the fluff in your budget, start digging into your variable expenses and rank what's most important to you. Do you really need unlimited texting on your cell phone? If not, get rid of it. Are you watching all the 437 channels of cable? Downgrade to basic. Step five: follow your spending and review monthly. You want to give your budget a fighting chance, right? So just keep an eye on your wallet, and especially those credit cards, to make sure you're spending within limits throughout the month. It's easy to forget - right? - and even easier for the small things to start adding up, so keep on it. Step six: keep track. Find a way that works for you to keep track of your expenses. That can mean the old pen and paper, a spreadsheet, or one of those new fancy, fun budgeting apps. A lot of banks have these as part of their online banking. They are easy to find and use, so be sure to look for them. Then, you just balance your budget. Keep your income information current and track your actual expenses monthly. After a few months, you're going to start to see patterns and figure out where you can streamline and make adjustments. Now, if you don’t want to go it alone, there are some sites all over the Internet to help you analyze what have you coming in and what you're spending. All in all, making a budget is a process that will take some time and effort, but put these steps into place and what you'll get in return is well worth it. Before long, you can have more money for the things you want, in addition to the things you need. Advertising Practices We strive to provide you with information about products and services you might find interesting and useful. Relationship-based ads and online behavioral advertising help us do that. Here's how it works: We gather information about your online activities, such as the searches you conduct on our Sites and the pages you visit. This information may be used to deliver advertising on our Sites and offline (for example, by phone, email and direct mail) that's customized to meet specific interests you may have. If you prefer that we do not use this information, you may. If you opt out, though, you may still receive generic advertising. In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements. Also, if you opt out of online behavioral advertising, you may still see ads when you sign in to your account, for example through Online Banking or MyMerrill. These ads are based on your specific account relationships with us. 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